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CBDT to come up with FAQs for settling tax litigation

The tax department will soon come out with a set of frequently asked questions (FAQs) with regard to the Dispute Resolution Scheme as it seeks to settle over 2.59 lakh appeals pending with Income Tax Commissioners.

Besides, the Central Board of Direct Taxes (CBDT) will also launch a massive publicity drive to make the scheme a success.

CBDT will soon come out with a set of 30 FAQs based on the queries it has received from various stakeholders, including chartered accountants and industry chambers.

“The department has compiled the FAQs which has been sent to the Finance Minister for his approval. The FAQs would be put up on the CBDT website this week or by next week,” a senior official said.

The Direct Tax Dispute Resolution Scheme, introduced from June 1, seeks to address the issue of pending litigation before Commissioner of I-T (Appeal). The scheme is open till December 31.

As per I-T department data, there were 73,402 appeals with tax effect above Rs 10 lakh and 1,85,858 appeals with tax effect below Rs 10 lakh are pending before CIT (Appeal) as on February 29. Thus, 2,59,260 appellants are eligible for the benefit of this scheme.

The FAQs, the official said, deal with questions received in regard to the process a taxpayer would adopt if he is fighting more than one case in CIT (Appeals).

Another query received from stakeholder, the official explained, pertains to what the tax payer should do if he received a tax demand notice and another notice for payment of penalty. So, whether, he would be liable for payment of penalty under the dispute resolution scheme.

“With this scheme, taxpayers stand to benefit by timely disposal of their litigation, while the department stands to reduce its administrative cost in disposing appeals and also to collect its due taxes,” the official added.

As per the scheme, a taxpayer who has an appeal pending before the CIT (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of cases with disputed tax up to Rs 10 lakh will be levied.

For cases exceeding Rs 10 lakh, 25 per cent of penalty would be levied and any pending appeal against a penalty order can also be settled by paying 25 per cent of the minimum of the imposable penalty.